I have been tempted by some CD rates offered by Internet banks. They have no brick and mortar buildings to visit, everything is done online or over the phone, or, GASP! by mail. I am thinking of using one to get a bit more interest on the money I am stashing away for the nest 12-24 months as I approach retirement. Of course, the bank must be FDIC insured. Are there any other considerations that need to be taken into account? Any surprises that you did not expect?
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No problem at all.
I have an online savings account earning 1.15% APY with Discover Bank. In the past, I have also had CDs with ING Direct and HSBC online banking, and have never had a problem with any of them.
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Join Date: May 2005
Posts: 6,904
Yes, there can be a surprise...
I used Bank of the Internet and IIRC I could move money TO them online, but could not move money FROM them back to my brick and mortar bank... sure, I could write a check and deposit it, but that was a trip to the bank... also, trying to close an account is not easy.... they wanted forms etc... just wrote a check for the amount I had in the bank and deposited it... lost whatever interest I earned and have not tried to get it...
I have used ING, HSBC, USAA and Penfed. No complaints or surprises so far. Penfed is not actually an internet bank, but since I live no where close to one of its branches, it is for me.
I use Ally bank all the time. Easy to transfer funds from Ally to BofA for my checking account. Two day transfer time from Ally. BofA wants three days and charges me a fee. I called Ally and they told me to do the transfer request thru Ally. In other words, haveAlly request transfer of funds from BofA to Ally. Quicker by a day and no fee.
I have experience with Ally, Amex, & USAA. The only problem I had was with Ally's bill payer service. They made a $2k mistake by double paying off my Amex CC balance. Ally quickly removed the double payment when alerted but it took over a month and many calls for my money to be returned to my account.
After complaining to the FDIC and the OCC, Ally apologized and paid me the few cents of interest for holding my $2K in their coffers for so long. I essentially closed out the accounts by transferring the funds to a local CU.
That experience convinced me to avoid Internet banks for volatile checking accounts and large CDs because it is more effective working with an institution where you can meet with someone in person, if necessary. You aren't going to fly to their headquarters so Internet banks agents are not as responsive as those who work at brick and mortar locations, IMO.
(That is also the reason I prefer Fidelity over Vanguard and State Farm over GEICO.)
I've been thinking of the same thing but also wondered about the safety. The first thing I did was come here, then I thought I'd start some investigation. I called ALLY because I couldn't understand how they could be paying 1.6 for a 2 yr cd.
They are listed under the top 50 on the Federal Reserve page:
and check an institution or holding company you want. By the way, ALLY is a holding company, but then too is PNC...which is one of our banks. I also bank at Dollar Bank and they were paying 2% on a savings you hold if you also have a checking. Now they pay 1.5% up to 20K. So, I'm keeping it there until it reaches $20K, then decide between CD's or bonds.
I only use places with a location even if it is a two day drive. I could get there and solve a problem if I had too. I don't like internet only.
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Proverbs 15:22 Designs are brought to nothing where there is no counsel: but where there are many counsellors, they are established.
No problem at all.
I have an online savings account earning 1.15% APY with Discover Bank. In the past, I have also had CDs with ING Direct and HSBC online banking, and have never had a problem with any of them.
+1 Exactly. I started with ING and then went to HSBC. Now with Discover Bank.
I buy all my CDs with Edward Jones. No surprise at all, and everything is online.
What is Edward Jones paying on a 1 and 2 year CD right now?
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Proverbs 15:22 Designs are brought to nothing where there is no counsel: but where there are many counsellors, they are established.
I had an issue with ING...we had two different accounts with them, and I authorized an auto-transfer, but they took it from the wrong account, causing an overdraft. When they refused to pay for the overdraft, I moved my account...$75,000 worth...and then they charged me an "account closure" fee of about $25. Made me furious, so I wrote to the AG in their state and filed a complaint with the BBB as well. Can't recall the details...this was 6-7 years ago. They were so rude to me on the phone I could not believe it.
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I had an issue with ING...we had two different accounts with them, and I authorized an auto-transfer, but they took it from the wrong account, causing an overdraft. When they refused to pay for the overdraft, I moved my account...$75,000 worth...and then they charged me an "account closure" fee of about $25. Made me furious, so I wrote to the AG in their state and filed a complaint with the BBB as well. Can't recall the details...this was 6-7 years ago. They were so rude to me on the phone I could not believe it.
Funny. I just cancelled an application @ING today. I had to call because I keep a credit lock in place. While on hold, they had an obnoxious commercial playing. I could break out of it. Then, they had a female voice providing instructions on how to obtain my account number if I didn't have it because she wasn't a mind reader. (I had my number.)
When the rep came on the line, I cancelled. I'm glad I did.
Ally has been my best experience thus far. i locked in some whopping 2.3% interest 5 years CD's last july. I believe it is 60 days penalty for early withdrawl...
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